- Ben McMillan thinks cryptocurrencies may be due for a pullback in the near-term.
- But on a longer timeline, he believes the revolutionary technology is still in its early innings.
- McMillan shared four projects he thinks have compelling use cases.
In the short-term, Ben McMillan is starting to pump the brakes a bit when it comes to crypto.
McMillan, the chief investment officer at IDX Digital Assets, which manages around $550 million in assets, uses a model that takes into account various measures of momentum. Right now that model says we’re in a “wait and see” period, he said, highlighting similarities to the beginning of the spring crypto
“There’s something out there that suggests that the buying speculation has subsided a little bit. And again, that’s when you want to take the chips off the table relatively quickly,” McMillan told Insider on Monday.
For example, back in mid-April bitcoin began what ended up being a 52% drop. Its price has been relatively flat over the last few weeks.
“Back in May was a perfect example. We saw this exact type of waning momentum despite the fact that we were up against all-time-highs and there was a lot of excitement and positive sentiment,” he added. “Our models were very sensitive to the fact that there was waning momentum in bitcoin.”
But that’s for the weeks and months ahead.
out, and McMillan characterizes the implications of increasing crypto adoption as nothing short of monumental, and thinks we are in the early days of the asset class’s growth.
The fundamentals for the space have “never looked better,” he said. He is especially bullish on decentralized finance (DeFi) protocols, as clients can see a clearer use case for them than with cryptocurrencies like bitcoin, for example.
“I’m old enough to remember the early days of the internet in the early 90s when a lot of people thought emails were a fad, or websites were a fad. And now of course they’re ubiquitous,” he said. “I think we’re at a very similar stage in the DeFi ecosystem where a lot of people are starting to see that, ‘Hey these are solving real world problems, this might not be just kind of a niche fad.'”
He continued: “It’s every bit as revolutionary as the internet was. And I do think 10-20 years from now we’re all going to look back and laugh to ever think that it was a fad.”
4 altcoins McMillan likes
Just like some websites disappeared after the dot-com bubble, some crypto projects will fade away, McMillan said. But he believes four altcoins in particular have strong chances of sticking around and finding success.
“We’ve been very bullish on solana for a long time because it represented a powerful compliment, not a competitor, but a complement to ethereum as a layer-one solution,” McMillan said.
McMillan’s bullishness on solana is emblematic of his “chain agnostic” outlook, and his desire to diversify investments across a number of growing projects. Ethereum is currently the world’s second-largest crypto by
, and the largest proof-of-stake network. A majority of DeFi protocols are built on top of it.
Despite this, its inefficiencies open up opportunities for competitors — though an expected upgrade to “ETH 2.0” that could happen next year is supposed to correct many of these weaknesses.
Next, McMillan likes chainlink (LINK), one of the applications built on top of ethereum. It helps to integrate blockchains with other blockchains and the outside world.
“I think chainlink is one that is still underappreciated,” he said. “It provides the so-called oracle services, the picks and shovels layer, the infrastructure layer, which I think is going to be hugely important going forward.”
Next is bancor (BNT), a crypto conversion platform like uniswap. McMillan said bancor’s original code will help them in the long run.
“Those guys did a really good job of really being thoughtful when they established their protocol. And so what you saw in the growth of DeFi Summer 2020, you saw a lot of other protocols just sort of forking other people’s code and getting to market very quickly, which isn’t necessarily a bad thing, it facilitated a lot of growth,” McMillan said.
“But we’re starting to see a greater appreciation for DAOs that are well-structured and well-thought out,” he continued. “So that’s one that I think could see a lot of interesting developments in the future, particularly as institutions start to appreciate what they’ve built.”
Finally, McMillan likes stellar lumens (XLM), which facilitates international transfers, simplifying the process currently in place in traditional finance.
“When you look at the global payments network, that’s very antiquated technology,” he said. “I could easily see something like that as it starts to become integrated in consumer focused applications layers. It could really take a big chunk out of a huge multi-trillion dollar international payments network.”